Five Steps to Close 2018's Warehousing Performance Gap

Consistently maintaining performance on most of the measures in the 2018 DC Measures Study still eludes everyone.

Best-in-class, median, and major opportunity performers saw performance decline on a majority of the metrics. Best-in-class performers are still ahead in that they maintained performance on some of the measures. However, their performance dropped on those metrics that they had improved in 2017.

As we look back over the years, the biggest trend in the annual DC Measures Study has been the closing of performance gaps between best-in-class and major opportunity performers. In 2018, however, there was little improvement in performance on the metrics in the study.

The decrease in performance suggests that consistency is missing. To drive consistency, we must focus on continuous improvement and training employees to utilize those methodologies. It's time to tap into the brains of our people and not their brawn, especially on the shop floor.

A Culture of 'Measure and Improve'

Having a continuous improvement and measurement process in place ensures frequent, constructive reviews of the metrics. The key is to show workers how their performance affects the overall business, then work with them to facilitate the selection and implementation of the measures.

A five-step process, Validating the Value-Add (VVA) establishes metrics that support the overall company objectives and goals.

1. Clearly define the company’s objectives. Companies need to determine their desired outcomes and strategy. Then articulate the desired outcomes and strategy such as “I want to achieve a 10 percent improvement in shipping accurate orders.” Follow up with your people to make sure they understand the strategy and what their role is in helping to achieve that objective.

2. Develop the validating the value add (VVA) statement. Create value-add statements that are under your team’s control. Essentially, how does the team add value in achieving the company’s objectives. For example, “Our team adds value by maintaining 99.4 percent or better accuracy on order picking.”

3 Measure the progress against your VVA. Once clear expectations have been set, measure the team’s progress against their goal. Make it easy to see that goals are indeed being met by summarizing data so that the results are obvious. Also, be sure to include historical data to track trends.

4. Build a Pareto of reasons for not meeting the goal. Create a process for root-cause analysis and development of corrective action plans. For example, create a Pareto chart to show where to focus your efforts. The obvious problem is usually not the root cause, and in order to keep the problem from recurring, the team must drill-down to find the underlying reasons for the problem.

5. Take action — fix the problem. By outlining the steps you are taking to correct problems that have been identified in Step 4 you mitigate emotions and finger pointing. Plus taking action will help drive change to improve your performance. However, if you are not willing to do something about it all of the work to this point means nothing.

The Outlook

We continue to see strong performance results from firms which focus on people first. Regardless of what processes we use or what technologies we implement, people will continue to be the driving force in the warehouse. In other words, our processes and technologies are only as good as the people using them.